MBANow: MBA Chief Economist Mike Fratantoni on Revised MBA Forecasts

The Mortgage Bankers Association released a new MBANow video featuring MBA Chief Economist Mike Fratantoni, who discusses the most recent MBA mortgage finance forecast and economic forecast.

The video can be viewed at https://www.youtube.com/watch?v=uq8CuU9fTdw&feature=em-uploademail.

The most recent forecasts call for a 9 percent increase in purchase market activity in 2017, higher than originally forecast. Fratantoni said the projected increase is a direct result of a strong job market.

“So far this year we’ve seen the job market much stronger than anticipated, averaging about 185,000 jobs per month and in April, 211,000 net gain in employment,” Fratantoni said. “The unemployment rate has fallen to 4.4 percent. All of this projects a much stronger job market, which is really the most important fundamental in support of the housing market.”

MBA said mortgage interest rates, currently near 4.25 percent, should rise to between 4.60 percent by the end of the year. “We expect the Fed to raise rates twice more this year, in June and September, and that by December they will allow their balance sheet to shrink–all of those factors putting upward pressure on rates,” Fratantoni said.

By the end of 2018, Fratantoni said the mortgage market will look somewhat different than currently. “Right now, refinances account for about 40 percent of origination volume,” he said. “We think by the end of 2018 it will be down to about 28 percent. We expect refinance volumes to fall further as rates increase, and purchase volume to keep growing. So that strong job market and a modest increase in mortgage interest rates will keep home buyers active.”

Other videos in the MBANow series can be viewed at the MBA YouTube channel, https://www.youtube.com/watch?v=Swk2VUJeZFI&feature=em-uploademail. The videos are also available on the MBA Insights landing page, https://www.mba.org/publications/insights/insights-publication##SubscriberID####RND##&PageID=21109.